‘Not all doom and gloom’ as construction continues to decline

There are signs for optimism in the new construction data from the Office for National Statistics (ONS), despite a third consecutive three-month on three-month decline in output.

Figures out today revealed that construction output continued its recent decline in the three-month on three-month series, falling by 1.7% in May 2018. The fall represents the third consecutive decline in the three-month on three-month series.

The fall in construction output was driven predominantly by a fall in new work, which also fell for the third consecutive month, decreasing by 2.5% in May 2018.

Following a broadly negative start to 2018 in the month-on-month series, construction output showed signs of recovery in May 2018, increasing by 2.9% compared with April 2018.

The month-on-month growth in construction output was in part driven by the recovery of private housing repair and maintenance work, which grew 7.3% in May 2018 following a weak start to the year.

Allan Callaghan, managing director of Cruden Building, said a further dip in total output is “disappointing, but it’s not all doom and gloom”.

He added: “This month’s figures show signs of recovery and the housebuilding sector remains resilient and continues to make a strong contribution to the construction industry.

“Scotland’s need for more homes, both private and social housing, continues to gather pace. Cruden is responding to this and we will shortly be announcing significant investment in sales developments secured. This will allow us to keep abreast of this strong market demand and provide valuable employment and training opportunities in the future.”

Mark Robinson, chief executive of Scape Group, said the UK government should not become distracted by Brexit and must continue with the business of building.

Mr Robinson said: “Although today’s data points to disappointing level of output over the past three months, it is clear that in May things started to turn around. It is particularly promising to see that total new work increased by £13.7 billion over the past month alone, including significant contributions from infrastructure, as well as strong housebuilding.

“However, we still have a long way to go to reach output levels needed to keep the UK as a world-leader in the development of new infrastructure. Our latest research report finds that over the last two decades, infrastructure output across the UK has increased by just £70 per person. Despite record investment, the supply chain has not seen much increase in construction activity on the ground. More must be done to ensure SMEs benefit from the delivery of new infrastructure projects, particularly as we head towards Brexit.

“Even greater investment in infrastructure is also essential if the UK is to remain competitive. Our rapidly growing population deserves greater investment in the services they use every day to ensure that they run both efficiently and effectively. The government should not become distracted by Brexit and must continue with the business of building; committing to invest in our road and rail links will improve connectivity between cities and help them to flourish. Clarity and consistency on Brexit is essential to keep the construction industry and the wider economy moving in the right direction.”